Some small businesses question new health care rules for temporary workers

Owner of Park Avenue Catering Bruce Riezenman, right, and his chef Victor Roldan do some final seasoning to the food to be sent out from their headquarters in Cotati on Wednesday, October 2, 2013. (Conner Jay/The Press Democrat)

BY MARTIN ESPINOZA

THE PRESS DEMOCRAT

October 16, 2013, 9:11PM

10/16/2013

Bruce Riezenman, owner of Park Avenue Catering in Cotati, voted for Barack Obama and supported the President's hard-fought campaign to make Obamacare the law of the land.

Riezenman, who also owns the Park 121 cafe in Sonoma, has long provided robust health benefits to his full-time employees. He says he strongly supported a law that would require other business owners to do the same.

"I thought that now everyone else would have to do what I've been doing all along," he said.

However, with the official launch this month of the Patient Protection and Affordable Care Act, Riezenman is now having serious concerns about certain aspects of the law.

Specifically, he's worried about the law's requirement that employers with 50 or more workers must provide them with health insurance in 2015. That's fine if you have 50 regular full-time employees — or the equivalent of 50 full-time part-timers — working for you.

But what about businesses like Riezenman's that rely on a large number of seasonal workers? Under the new law, seasonal employees who work more than 120 consecutive days are considered full-time employees.

As such, they must be provided with health insurance — a financial burden that usually doesn't pencil out, given how few hours they work during the year.

"The biggest thing for me is: Am I under 50 employees, or am I over?" Riezenman said. "The majority of what I do is on-call and seasonal workers."

Riezenman said he has about 25 full-time employees, between 15 and 20 part-time workers and about 200 seasonal workers. Because of the nature of the catering business, his workforce swells during peak-season months.

His seasonal employees include college students and stay-at-home moms who want to make a little extra money for the holidays. About 75 percent of his business happens during a six-month period.

Under the health care law, employees who work 30 hours a week or more are considered full-time. Those who work less than that are part-time, and "full-time" employees who work less than 120 consecutive day are considered seasonal.

To determine whether or not a company has a workforce that has more than 50 full-time equivalents, or FTEs, the company starts with all employees who work 30 hours or more. The company then combines all the hours worked of its part-time employees and divides that number by 120 for a monthly total of full-time equivalents.

These two numbers are added and if it equals more than 50, then the company must provide health insurance to its employees.

In some cases, small businesses provide health insurance to certain full-time employees but not others, say restaurant managers vs. kitchen staff. But once a company's workforce reaches more than 50 FTEs, the company must provide affordable insurance to all full-time employees and their children up to age 26 or face penalties.

If Riezenman is required to provide health insurance for a seasonal worker, the cost of that insurance in relation to the number of hours that employee works is far greater than what he pays for providing health insurance to a full-time employee.

"That's the math that scares me about this," Riezenman said.

David Hodges, a Santa Rosa insurance broker who is certified to do business through Covered California, the state's health insurance marketplace, said the Affordable Care Act needs more flexibility to deal fairly with companies that rely on a seasonal workforce.

"The inflexibility of the ACA is going to make it very difficult for wineries, restaurants, catering companies, most anyone in the service industry that has peak business times," he said.

Small businesses seeking to keep their seasonal workers under 120 days of employment are likely going to have to better track their payroll, in some cases opting for expensive payroll systems.

Terry Hill, Northern California manager for ADP, a global business outsourcing and human capital management company, said the ACA makes it crucial for companies to accurately track their workforce.

ADP has software services that flag employers when their workers reach determined hourly thresholds, Hill said. The service has been used for years for companies that track overtime.

"If someone is approaching full-time equivalency, the employer is notified so they can act," Hill said. "We have a very robust solution that does many, many things that help a company manage risk and manage the complexities of doing business in California."

Hill estimated the cost of such services to be between $200 and $1,000 a month for an average North Bay company, depending on the complexity of the services that are provided.

Riezenman said he wishes there were more flexibility in the Affordable Care Act for companies like his. The issue could have been dealt with in Congress by now since the law's passage in 2009.

"They needed to get together to figure this out, and they didn't," he said.

Bruce Riezenman, owner of Park Avenue Catering in Cotati, voted for Barack Obama and supported the President's hard-fought campaign to make Obamacare the law of the land.

Riezenman, who also owns the Park 121 cafe in Sonoma, has long provided robust health benefits to his full-time employees. He says he strongly supported a law that would require other business owners to do the same.

"I thought that now everyone else would have to do what I've been doing all along," he said.

However, with the official launch this month of the Patient Protection and Affordable Care Act, Riezenman is now having serious concerns about certain aspects of the law.

Specifically, he's worried about the law's requirement that employers with 50 or more workers must provide them with health insurance in 2015. That's fine if you have 50 regular full-time employees — or the equivalent of 50 full-time part-timers — working for you.

But what about businesses like Riezenman's that rely on a large number of seasonal workers? Under the new law, seasonal employees who work more than 120 consecutive days are considered full-time employees.

As such, they must be provided with health insurance — a financial burden that usually doesn't pencil out, given how few hours they work during the year.

"The biggest thing for me is: Am I under 50 employees, or am I over?" Riezenman said. "The majority of what I do is on-call and seasonal workers."

Riezenman said he has about 25 full-time employees, between 15 and 20 part-time workers and about 200 seasonal workers. Because of the nature of the catering business, his workforce swells during peak-season months.

His seasonal employees include college students and stay-at-home moms who want to make a little extra money for the holidays. About 75 percent of his business happens during a six-month period.

"I love the fact that I'm their Christmas money," Riezenman said.

Under the health care law, employees who work 30 hours a week or more are considered full-time. Those who work less than that are part-time, and "full-time" employees who work less than 120 consecutive day are considered seasonal.

To determine whether or not a company has a workforce that has more than 50 full-time equivalents, or FTEs, the company starts with all employees who work 30 hours or more. The company then combines all the hours worked of its part-time employees and divides that number by 120 for a monthly total of full-time equivalents.

These two numbers are added and if it equals more than 50, then the company must provide health insurance to its employees.

In some cases, small businesses provide health insurance to certain full-time employees but not others, say restaurant managers vs. kitchen staff. But once a company's workforce reaches more than 50 FTEs, the company must provide affordable insurance to all full-time employees and their children up to age 26 or face penalties.

If Riezenman is required to provide health insurance for a seasonal worker, the cost of that insurance in relation to the number of hours that employee works is far greater than what he pays for providing health insurance to a full-time employee.

"That's the math that scares me about this," Riezenman said.

David Hodges, a Santa Rosa insurance broker who is certified to do business through Covered California, the state's health insurance marketplace, said the Affordable Care Act needs more flexibility to deal fairly with companies that rely on a seasonal workforce.

"The inflexibility of the ACA is going to make it very difficult for wineries, restaurants, catering companies, most anyone in the service industry that has peak business times," he said.

Small businesses seeking to keep their seasonal workers under 120 days of employment are likely going to have to better track their payroll, in some cases opting for expensive payroll systems.

Riezenman said getting a new payroll system could cost up to $10,000.

Terry Hill, Northern California manager for ADP, a global business outsourcing and human capital management company, said the ACA makes it crucial for companies to accurately track their workforce.

ADP has software services that flag employers when their workers reach determined hourly thresholds, Hill said. The service has been used for years for companies that track overtime.

"If someone is approaching full-time equivalency, the employer is notified so they can act," Hill said. "We have a very robust solution that does many, many things that help a company manage risk and manage the complexities of doing business in California."

Hill estimated the cost of such services to be between $200 and $1,000 a month for an average North Bay company, depending on the complexity of the services that are provided.

Riezenman said he wishes there were more flexibility in the Affordable Care Act for companies like his. The issue could have been dealt with in Congress by now since the law's passage in 2009.

"They needed to get together to figure this out, and they didn't," he said.